ScottB
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Re: Pressure mounts on Airbus A330 in widebody order battle

Wed Mar 07, 2018 10:42 pm

jeffrey0032j wrote:
So as we recall Airbus was being opportunistic by taking advantage of the 787 production issues and early in-service issues back in the early 2010s to sell more A330ceos. Turns out that they may have overdone that campaign. Firstly, it delayed the development of the A330neo, which with hindsight should had been done much earlier to garner a bigger customer base (ie critical mass) for the neo. Secondly, they reduced the amount of potential customers for the A330neo as a lot of them have gotten brand new A330ceos and are unlikely to buy any neo in the short or medium term.


Well, the issue isn't just that a lot of customers have fairly new A330ceos which don't need to be replaced soon, but also that a fair number of A330s which were supposedly sold as "interim lift" during the delays in the 787 and A350 programs are still out there, in excellent condition, and available for quite reasonable prices to purchase or lease. If the majority of an airline's missions for an A330ceo/neo fleet are shorter-range, then the efficiency gains from the newer aircraft aren't as attractive, and the current generation will offer far more attractive lease or capital costs. I also expect that the relatively thin order book for the A330neo compared to its peers is driving up the cost of financing or leasing the aircraft; we see an allusion to this in the analyst comments that Air Asia may rethink its order "if it feels too exposed as the dominant buyer."

frigatebird wrote:
The A330-900 is a low cost / low risk project, and I wouldn't be surprised if it is already way past recouping its development cost. My personal opinion however, is that the A330neo can only win sales campaigns if the airline hasn't yet ordered 787s. But that's okay, it won't sell as many as 787s, but Airbus will have a lot more profit with the A330neo than without it.


I don't think the concern is that the A330neo won't make money, but rather that the days of the A330 as a profit engine are coming to a close and the A350 isn't yet there. There's also the question of opportunity cost with respect to aerospace engineers, assembly workers, factories, etc. -- could they make more money by beating Boeing to market in the segment which the NMA/797 is expected to occupy?
 
travelhound
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 1:28 am

For those of you who are interested please find below a link to a google sheet with A330 and 787 orders and deliveries.

https://docs.google.com/spreadsheets/d/ ... edit#gid=0

I normally use this sheet for my own use so it could take a while to work out.

In essence there are more than 1000 outstanding orders for the A330 and 787. You will note there are very few airlines that have both the A330 and 787 on order.

In columns L and M I have listed the airlines that, at a guess, should be ordering A330/787's in the near future. If the customers current ordering patterns trend towards Airbus I have reduced the order amount in Column N. You will note in row 145 has the totals for expected new orders. The forecast suggests the 787 will receive the majority of the orders (701-197).

Please don't flame me for posting the spreadsheet. As mentioned before I normally use the sheet fro my own reference. I am posting it as it may be of interest to some members. It is not totally up to date, but for the sake of the exercise is good enough to help us determine current A330/787 ordering patterns.
 
Waterbomber
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 3:59 am

I think that we can ask ourselves a totally different question.
Could Airbus launch the A330-1000 as a more regional option to attack the B787-10?
 
bigjku
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 4:14 am

Waterbomber wrote:
I think that we can ask ourselves a totally different question.
Could Airbus launch the A330-1000 as a more regional option to attack the B787-10?


I don’t believe Airbus can build an A330neo more cheaply than the comparable 787 can now be built. At least not to nearly the extent that underlay the initial a330neo business case.
 
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flee
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 5:38 am

Yes, Boeing cannot be giving all and sundry discount prices that undercuts Airbus A330Neos! If they did so, Airbus would probably be very happy as they will know that Boeing won't be making much (if any) money on those orders!
 
RJMAZ
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 7:24 am

Waterbomber wrote:
I think that we can ask ourselves a totally different question.
Could Airbus launch the A330-1000 as a more regional option to attack the B787-10?

Highly doubtful.

The A350 would have the same capacity.

You would expect the A330 to burn less fuel on the same trip but the A359's better wing and carbon design would make it near equal. The A330-1000 slightly lower empty weight would not be able to make up for it.

This contrasts the 787-10 which is substantially lighter than the 777 of similar capacity.

Airbus should have put a carbon wing on the A330NEO and one of much smaller size and capability optimised around the A330-800 length. The A330-900 would have been like the 787-10 or 757-300 sacrificing range for payload.

This would have made the A330NEO a good 10% lighter and made a nice even spread between the A321NEO A330NEO and A350. Currently the A330NEO overlaps the A350 and is really a poor man's version. In the long run once availability of the A350 improves the A330NEO orders will dry up.

I predict only around 200 A330NEO's will get built.

If they had of invested more in a new wing they would have built 1000+.
 
Waterbomber
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 10:44 am

RJMAZ wrote:
Waterbomber wrote:
I think that we can ask ourselves a totally different question.
Could Airbus launch the A330-1000 as a more regional option to attack the B787-10?

Highly doubtful.

The A350 would have the same capacity.

You would expect the A330 to burn less fuel on the same trip but the A359's better wing and carbon design would make it near equal. The A330-1000 slightly lower empty weight would not be able to make up for it.

This contrasts the 787-10 which is substantially lighter than the 777 of similar capacity.

Airbus should have put a carbon wing on the A330NEO and one of much smaller size and capability optimised around the A330-800 length. The A330-900 would have been like the 787-10 or 757-300 sacrificing range for payload.

This would have made the A330NEO a good 10% lighter and made a nice even spread between the A321NEO A330NEO and A350. Currently the A330NEO overlaps the A350 and is really a poor man's version. In the long run once availability of the A350 improves the A330NEO orders will dry up.

I predict only around 200 A330NEO's will get built.

If they had of invested more in a new wing they would have built 1000+.


I think that a stretched A330-1000 would be slighty lighter than the A359 and would be cheaper to build/buy.
The A359 is a great airplane, but with the currrent backlog, Airbus doesn't have many delivery slots before 2025 and neither does Boeing's B787.
Airbus can virtually increase A330 production rates to 120 a year overnight.

A simple stretch would sacrifice range for OEW and payload or could get a higher thrust rating with more powerfful engines and maintain range through a higher MTOW.
This is the sweet spot of the widebody market, and many current A330-300 operators may want to upgauge without having to commit to the higher capital cost of the A359 or the B787-10.

I don't think that an overlap with the A350 family is an issue.
The A339 didn't exactly cannibalise the A358, it's just that operators are more interested in stretches than they are in the shortest model of a family.

If launched today, it could be ready for delivery as soon as 2021.
 
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MrHMSH
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 10:45 am

RJMAZ wrote:
Waterbomber wrote:
I think that we can ask ourselves a totally different question.
Could Airbus launch the A330-1000 as a more regional option to attack the B787-10?

Highly doubtful.

The A350 would have the same capacity.

You would expect the A330 to burn less fuel on the same trip but the A359's better wing and carbon design would make it near equal. The A330-1000 slightly lower empty weight would not be able to make up for it.

This contrasts the 787-10 which is substantially lighter than the 777 of similar capacity.

Airbus should have put a carbon wing on the A330NEO and one of much smaller size and capability optimised around the A330-800 length. The A330-900 would have been like the 787-10 or 757-300 sacrificing range for payload.

This would have made the A330NEO a good 10% lighter and made a nice even spread between the A321NEO A330NEO and A350. Currently the A330NEO overlaps the A350 and is really a poor man's version. In the long run once availability of the A350 improves the A330NEO orders will dry up.

I predict only around 200 A330NEO's will get built.

If they had of invested more in a new wing they would have built 1000+.


The A330neo already has over 200 orders, even allowing for uncertainties do you really think they won’t sell even 50-100 more?
 
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par13del
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 10:56 am

ScottB wrote:
Well, the issue isn't just that a lot of customers have fairly new A330ceos which don't need to be replaced soon, but also that a fair number of A330s which were supposedly sold as "interim lift" during the delays in the 787 and A350 programs are still out there, in excellent condition, and available for quite reasonable prices to purchase or lease.

If they were sold as "interim lift", being replaced would free them up onto the lease market to allow prices to fall, so far how many airlines have placed orders to replace their "interim lift"? Until that happens, the lease rates are unaffected by interim lift replacement, it can also be noted that a number of 777-200ER that were displaced by A330's are now or still on the market, that may be a larger factor in the lower lease rates, add to the fact that EK may start putting out a few 777W's and A380's in the next year or two and a perfect storm may be brewing in the lease market.
 
bigjku
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 11:14 am

flee wrote:
Yes, Boeing cannot be giving all and sundry discount prices that undercuts Airbus A330Neos! If they did so, Airbus would probably be very happy as they will know that Boeing won't be making much (if any) money on those orders!


I don’t believe this to be true. In 2014 analysis around the Delta A339 order put the offered prices at $134 million for the 789 and $124 million for the NEO. This was based on a production rate of 7-8 with the plan of going to 10 according to Leahey about 5 months prior to this order. Rate is now 6. 787 production was then planned for 12 and had less availability. Now it is going to 14. So it’s rate is up 17% and A330neo rates are down between 15 to 40% less than what was contemplated.

The estimated price difference on the Delta offers was 9%. All the changes we have seen since favor a lower priced 787 and higher priced A330neo going forward. Indeed if Boeing really was able to offer Hawaiian around $115 million a piece or close to it they are clearly comfortable at that price now where they were not before. The -10 is going to cost more than the -9 but on shorter routes where you can fill the thing it’s going to clobber an A330neo on operating cost and margins. If the prices are comparable at this point I get 9-16% more cargo capacity depending on which 787 I choose.

I don’t think people have fully grasped the implications of even an eroding capital cost margin for the a330neo let alone a world in which such margin doesn’t exist at all. It is a project that has basically one strength and that is it. If that goes away it makes almost no sense as a program.
 
RalXWB
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 11:20 am

So in your world the A330 has basically only one strength. Perhaps you should write Airbus that it almost makes no sense as a program :banghead:
 
RJMAZ
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 11:42 am

MrHMSH wrote:
The A330neo already has over 200 orders, even allowing for uncertainties do you really think they won’t sell even 50-100 more?

With the Hawaiian cancellation we're at the point where the death spiral will begin. It's a common loop.

Production rate drops
Production cost per aircraft increases
Profit margin reduces
Resale value reduces
Lease companies gives lower residuals
No new orders eventuate as the 787 and A350 are now more attractive.
And then the loop goes back to the top.

Waterbomber wrote:
I think that a stretched A330-1000 would be slighty lighter than the A359 and would be cheaper to build/buy.
The A359 is a great airplane, but with the currrent backlog, Airbus doesn't have many delivery slots before 2025 and neither does Boeing's B787.
Airbus can virtually increase A330 production rates to 120 a year overnight.

Production cost is linked to the production rate. Once production rate of the A350 ramps up it will become cheaper to produce just like what the 787 is acheiving now. The A330 production rate will have to drop as there's only 3 years of production left.

So the A330's price advantage will eventually disappear. Once the A350 and 787 production rates start eating into the backlog the availability advantage of the A330 also disappears.

It will reach a point where Airbus will just increase the A350 production rate allowing them to make better deals due to lower production costs.
 
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seahawk
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 11:44 am

Which would leave Airbus in a very weak position, as they would offer only 2 market viable products. The A320 series and the A350 series. So either they make the A330 cheaper or they need to start another project.
 
jeffrey0032j
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 11:54 am

MrHMSH wrote:
RJMAZ wrote:
Waterbomber wrote:
I think that we can ask ourselves a totally different question.
Could Airbus launch the A330-1000 as a more regional option to attack the B787-10?

Highly doubtful.

The A350 would have the same capacity.

You would expect the A330 to burn less fuel on the same trip but the A359's better wing and carbon design would make it near equal. The A330-1000 slightly lower empty weight would not be able to make up for it.

This contrasts the 787-10 which is substantially lighter than the 777 of similar capacity.

Airbus should have put a carbon wing on the A330NEO and one of much smaller size and capability optimised around the A330-800 length. The A330-900 would have been like the 787-10 or 757-300 sacrificing range for payload.

This would have made the A330NEO a good 10% lighter and made a nice even spread between the A321NEO A330NEO and A350. Currently the A330NEO overlaps the A350 and is really a poor man's version. In the long run once availability of the A350 improves the A330NEO orders will dry up.

I predict only around 200 A330NEO's will get built.

If they had of invested more in a new wing they would have built 1000+.


The A330neo already has over 200 orders, even allowing for uncertainties do you really think they won’t sell even 50-100 more?

Except that more than half of the 200+ orders were made at or shortly after launch in 2014. Sure they will get 50-100 more orders, but probably at a rate similar to the 767 for the past 10 years.
 
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 11:57 am

RJMAZ wrote:
It will reach a point where Airbus will just increase the A350 production rate allowing them to make better deals due to lower production costs.


I doubt such thing is possible. The A350 engines alone are much more expensive than the T700 and will remain so. New aircraft like the A350 and 787 use more expensive components, you're basically trying to argue that a 777 can be assembled for the price of an 767. It won't happen, no matter how high you'd push the 777 rate.
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jeffrey0032j
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 12:01 pm

Waterbomber wrote:
RJMAZ wrote:
Waterbomber wrote:
I think that we can ask ourselves a totally different question.
Could Airbus launch the A330-1000 as a more regional option to attack the B787-10?

Highly doubtful.

The A350 would have the same capacity.

You would expect the A330 to burn less fuel on the same trip but the A359's better wing and carbon design would make it near equal. The A330-1000 slightly lower empty weight would not be able to make up for it.

This contrasts the 787-10 which is substantially lighter than the 777 of similar capacity.

Airbus should have put a carbon wing on the A330NEO and one of much smaller size and capability optimised around the A330-800 length. The A330-900 would have been like the 787-10 or 757-300 sacrificing range for payload.

This would have made the A330NEO a good 10% lighter and made a nice even spread between the A321NEO A330NEO and A350. Currently the A330NEO overlaps the A350 and is really a poor man's version. In the long run once availability of the A350 improves the A330NEO orders will dry up.

I predict only around 200 A330NEO's will get built.

If they had of invested more in a new wing they would have built 1000+.


I think that a stretched A330-1000 would be slighty lighter than the A359 and would be cheaper to build/buy.
The A359 is a great airplane, but with the currrent backlog, Airbus doesn't have many delivery slots before 2025 and neither does Boeing's B787.
Airbus can virtually increase A330 production rates to 120 a year overnight.

Except that the reality is opposite of your views. Airbus has had to cut production rates on the A330 line, and Boeing has increased the 787 production rates and opening up new slots for more orders like HA's, how else do you think HA was able to get its 787s 3 years down the road? Availability is no longer an A330 selling point as the 787 production had stabilised a few years back and allowing Boeing to make the 787 more available than before.
 
bigjku
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 12:18 pm

RalXWB wrote:
So in your world the A330 has basically only one strength. Perhaps you should write Airbus that it almost makes no sense as a program :banghead:


Keep in mind that doesn’t mean it’s a bad airplane. But it sells against the 787 on one major strength, it is cheaper to acquire. It’s not more efficient to operate on any realistic flight profile. I suppose you have training and MX efficieicnes if you operate the type already.

Why don’t you tell me what the strengths are of the A330neo if it is available for a roughly similar price to the 787?
 
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MrHMSH
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 12:30 pm

RJMAZ wrote:
MrHMSH wrote:
The A330neo already has over 200 orders, even allowing for uncertainties do you really think they won’t sell even 50-100 more?

With the Hawaiian cancellation we're at the point where the death spiral will begin. It's a common loop.

Production rate drops
Production cost per aircraft increases
Profit margin reduces
Resale value reduces
Lease companies gives lower residuals
No new orders eventuate as the 787 and A350 are now more attractive.
And then the loop goes back to the top.

Waterbomber wrote:
I think that a stretched A330-1000 would be slighty lighter than the A359 and would be cheaper to build/buy.
The A359 is a great airplane, but with the currrent backlog, Airbus doesn't have many delivery slots before 2025 and neither does Boeing's B787.
Airbus can virtually increase A330 production rates to 120 a year overnight.

Production cost is linked to the production rate. Once production rate of the A350 ramps up it will become cheaper to produce just like what the 787 is acheiving now. The A330 production rate will have to drop as there's only 3 years of production left.

So the A330's price advantage will eventually disappear. Once the A350 and 787 production rates start eating into the backlog the availability advantage of the A330 also disappears.

It will reach a point where Airbus will just increase the A350 production rate allowing them to make better deals due to lower production costs.


Based on one order being lost, one that involved an orphan type derived from an aircraft that was slowing down anyway?

I think 200 is far, far too pessimistic a prediction. Not everyone can afford the newest aircraft, not everyone wants to pay the margins that Airbus and Boeing want for them, and there are still plenty of new A330s that will need to be replaced that can’t be replaced by 787s or A350:s.

‘Death spiral’ is a very exaggerated term I feel.
 
Waterbomber
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 12:33 pm

jeffrey0032j wrote:
Waterbomber wrote:
RJMAZ wrote:
Highly doubtful.

The A350 would have the same capacity.

You would expect the A330 to burn less fuel on the same trip but the A359's better wing and carbon design would make it near equal. The A330-1000 slightly lower empty weight would not be able to make up for it.

This contrasts the 787-10 which is substantially lighter than the 777 of similar capacity.

Airbus should have put a carbon wing on the A330NEO and one of much smaller size and capability optimised around the A330-800 length. The A330-900 would have been like the 787-10 or 757-300 sacrificing range for payload.

This would have made the A330NEO a good 10% lighter and made a nice even spread between the A321NEO A330NEO and A350. Currently the A330NEO overlaps the A350 and is really a poor man's version. In the long run once availability of the A350 improves the A330NEO orders will dry up.

I predict only around 200 A330NEO's will get built.

If they had of invested more in a new wing they would have built 1000+.


I think that a stretched A330-1000 would be slighty lighter than the A359 and would be cheaper to build/buy.
The A359 is a great airplane, but with the currrent backlog, Airbus doesn't have many delivery slots before 2025 and neither does Boeing's B787.
Airbus can virtually increase A330 production rates to 120 a year overnight.

Except that the reality is opposite of your views. Airbus has had to cut production rates on the A330 line, and Boeing has increased the 787 production rates and opening up new slots for more orders like HA's, how else do you think HA was able to get its 787s 3 years down the road? Availability is no longer an A330 selling point as the 787 production had stabilised a few years back and allowing Boeing to make the 787 more available than before.


The reality also shows that Boeing is selling more and more B787-10's recently.
Also, the current B787 backlog is somewhere around 5 years worth, but some big LOI's (TK, EK) and conversion of options are looming, which should set any significant slot availability to beyond 2025.
 
mjoelnir
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 1:22 pm

bigjku wrote:
RalXWB wrote:
So in your world the A330 has basically only one strength. Perhaps you should write Airbus that it almost makes no sense as a program :banghead:


Keep in mind that doesn’t mean it’s a bad airplane. But it sells against the 787 on one major strength, it is cheaper to acquire. It’s not more efficient to operate on any realistic flight profile. I suppose you have training and MX efficieicnes if you operate the type already.

Why don’t you tell me what the strengths are of the A330neo if it is available for a roughly similar price to the 787?


The strength is, being roughly similar expensive to operate as the 787.
Taking it the other way round, is the 787 really more effective than the A330neo, and if yes how much. The numbers from the A330-900 test flights, seem to have convinced at least Air Asia to reconfirm their orders of the A330neo, so it could be, that the 787 is not that more effective.
 
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Revelation
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 1:26 pm

mjoelnir wrote:
bigjku wrote:
RalXWB wrote:
So in your world the A330 has basically only one strength. Perhaps you should write Airbus that it almost makes no sense as a program :banghead:


Keep in mind that doesn’t mean it’s a bad airplane. But it sells against the 787 on one major strength, it is cheaper to acquire. It’s not more efficient to operate on any realistic flight profile. I suppose you have training and MX efficieicnes if you operate the type already.

Why don’t you tell me what the strengths are of the A330neo if it is available for a roughly similar price to the 787?


The strength is, being roughly similar expensive to operate as the 787.
Taking it the other way round, is the 787 really more effective than the A330neo, and if yes how much. The numbers from the A330-900 test flights, seem to have convinced at least Air Asia to reconfirm their orders of the A330neo, so it could be, that the 787 is not that more effective.

And yet we read AirAsia X CEO in Seattle discussing 787-10...
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Wake now, discover that you are the song that the morning brings
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JustSomeDood
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 2:05 pm

MrHMSH wrote:
RJMAZ wrote:
MrHMSH wrote:
The A330neo already has over 200 orders, even allowing for uncertainties do you really think they won’t sell even 50-100 more?

With the Hawaiian cancellation we're at the point where the death spiral will begin. It's a common loop.

Production rate drops
Production cost per aircraft increases
Profit margin reduces
Resale value reduces
Lease companies gives lower residuals
No new orders eventuate as the 787 and A350 are now more attractive.
And then the loop goes back to the top.

Waterbomber wrote:
I think that a stretched A330-1000 would be slighty lighter than the A359 and would be cheaper to build/buy.
The A359 is a great airplane, but with the currrent backlog, Airbus doesn't have many delivery slots before 2025 and neither does Boeing's B787.
Airbus can virtually increase A330 production rates to 120 a year overnight.

Production cost is linked to the production rate. Once production rate of the A350 ramps up it will become cheaper to produce just like what the 787 is acheiving now. The A330 production rate will have to drop as there's only 3 years of production left.

So the A330's price advantage will eventually disappear. Once the A350 and 787 production rates start eating into the backlog the availability advantage of the A330 also disappears.

It will reach a point where Airbus will just increase the A350 production rate allowing them to make better deals due to lower production costs.


Based on one order being lost, one that involved an orphan type derived from an aircraft that was slowing down anyway?

I think 200 is far, far too pessimistic a prediction. Not everyone can afford the newest aircraft, not everyone wants to pay the margins that Airbus and Boeing want for them, and there are still plenty of new A330s that will need to be replaced that can’t be replaced by 787s or A350:s.

‘Death spiral’ is a very exaggerated term I feel.


And what, precisely, ignoring the (shrinking) production cost advantage, does a A330neo do that can't be replicated by a combination of:
787
A350
Used A330ceos, which are getting more available and cheap by the month.
 
NZ321
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 2:08 pm

The article for this thread is somewhat poorly researched in my opinion - typical of aviation journalism. For example, they list NZ and QF's upcoming order requirements as for the NEO to lose but the NEO is not on the table for these orders. There are a lot of A330s with Asian carriers coming up for replacement. Are you all saying that these airlines won't buy the NEO? I find this hard to believe especially considering better than anticipated performance. Airbus will have done some homework on this. There appears to be a lot of prediction of the demise of the A330. I am not one to predict this at the present time. That to me is a very bold prediction indeed. I'd say let's see how things unfold over the next 12 months once the A339 is in service and the A338 is certified.
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 2:12 pm

Revelation wrote:


787-10 for the price of an A339NEO? I'd certainly listen.
Murphy is an optimist
 
mjoelnir
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 2:21 pm

Revelation wrote:
mjoelnir wrote:
bigjku wrote:

Keep in mind that doesn’t mean it’s a bad airplane. But it sells against the 787 on one major strength, it is cheaper to acquire. It’s not more efficient to operate on any realistic flight profile. I suppose you have training and MX efficieicnes if you operate the type already.

Why don’t you tell me what the strengths are of the A330neo if it is available for a roughly similar price to the 787?


The strength is, being roughly similar expensive to operate as the 787.
Taking it the other way round, is the 787 really more effective than the A330neo, and if yes how much. The numbers from the A330-900 test flights, seem to have convinced at least Air Asia to reconfirm their orders of the A330neo, so it could be, that the 787 is not that more effective.

And yet we read AirAsia X CEO in Seattle discussing 787-10...


So what?
 
nehalem
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 2:24 pm

seahawk wrote:
Which would leave Airbus in a very weak position, as they would offer only 2 market viable products. The A320 series and the A350 series. So either they make the A330 cheaper or they need to start another project.


I'm not sure why that would put airbus in a weak position.

It seems that if Airbus can cover most of the same market with only 2 products, instead of 3 or even 4(with MOM), that is an advantage. If they then pushed out an A322 to compete with the low end of the MOM, then depending on the changes made to it they could be covering almost the same market opportunity with only 2.5 products instead of 4. Seems like that would be a pretty big advantage for Airbus profits.
 
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 2:27 pm

mjoelnir wrote:
bigjku wrote:
RalXWB wrote:
So in your world the A330 has basically only one strength. Perhaps you should write Airbus that it almost makes no sense as a program :banghead:


Keep in mind that doesn’t mean it’s a bad airplane. But it sells against the 787 on one major strength, it is cheaper to acquire. It’s not more efficient to operate on any realistic flight profile. I suppose you have training and MX efficieicnes if you operate the type already.

Why don’t you tell me what the strengths are of the A330neo if it is available for a roughly similar price to the 787?


The strength is, being roughly similar expensive to operate as the 787.
Taking it the other way round, is the 787 really more effective than the A330neo, and if yes how much. The numbers from the A330-900 test flights, seem to have convinced at least Air Asia to reconfirm their orders of the A330neo, so it could be, that the 787 is not that more effective.


Depends. I would start with this report.

https://airwaysmag.com/industry/analysi ... ilability/

Basically it projected about a 1% operating advantage for the 787 at $3.00 a gallon for jet fuel. Today the average price in the US is $4.49. This would alter the operating dynamics to the 787-9 being ahead by 3% or a bit more in terms of cash cost to operate. The 787-10 would be considerably more efficient on any route you could fill it on.

The 789 gives you a bit more range, considerably more at current MTOW and still a bit at 251t for the A339. The 787-10 would be sinfiicantly more efficient on shorter routes within a route structure assuming an airline can fill it.

And if you get the purchase price for a 787 lower as it seems to have gone then you can reverse out some additional percentage of the difference that made the A330neo make sense. It has to have that margin to make a lot of sense.

Last report I saw was basically that the A330neo was on spec and would get a range and payload boost from higher MTOW being contemplated. That doesn’t really solve the operating cost issue though.

https://www.ainonline.com/aviation-news ... l-variants
 
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 3:05 pm

JustSomeDood wrote:
MrHMSH wrote:
RJMAZ wrote:
With the Hawaiian cancellation we're at the point where the death spiral will begin. It's a common loop.

Production rate drops
Production cost per aircraft increases
Profit margin reduces
Resale value reduces
Lease companies gives lower residuals
No new orders eventuate as the 787 and A350 are now more attractive.
And then the loop goes back to the top.


Production cost is linked to the production rate. Once production rate of the A350 ramps up it will become cheaper to produce just like what the 787 is acheiving now. The A330 production rate will have to drop as there's only 3 years of production left.

So the A330's price advantage will eventually disappear. Once the A350 and 787 production rates start eating into the backlog the availability advantage of the A330 also disappears.

It will reach a point where Airbus will just increase the A350 production rate allowing them to make better deals due to lower production costs.


Based on one order being lost, one that involved an orphan type derived from an aircraft that was slowing down anyway?

I think 200 is far, far too pessimistic a prediction. Not everyone can afford the newest aircraft, not everyone wants to pay the margins that Airbus and Boeing want for them, and there are still plenty of new A330s that will need to be replaced that can’t be replaced by 787s or A350:s.

‘Death spiral’ is a very exaggerated term I feel.


And what, precisely, ignoring the (shrinking) production cost advantage, does a A330neo do that can't be replicated by a combination of:
787
A350
Used A330ceos, which are getting more available and cheap by the month.


My statement didn't include the A330ceo, you added that yourself, so if you ignore that then you have the availability, lower price and commonality. By the time the neweest A330ceos need replacing things may be different, Airbus themselves will have ended ceo production and will be pushing the neo. We've already seen some solid indications that the strong ceo leasing market will be covered well (not perfectly) with the neo. There aren't many A350s or 787s that are sold in smaller numbers to smaller airlines now, but the A330neo has already snagged a few despite not being in service yet.
 
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 3:06 pm

MrHMSH wrote:
JustSomeDood wrote:
MrHMSH wrote:

Based on one order being lost, one that involved an orphan type derived from an aircraft that was slowing down anyway?

I think 200 is far, far too pessimistic a prediction. Not everyone can afford the newest aircraft, not everyone wants to pay the margins that Airbus and Boeing want for them, and there are still plenty of new A330s that will need to be replaced that can’t be replaced by 787s or A350:s.

‘Death spiral’ is a very exaggerated term I feel.


And what, precisely, ignoring the (shrinking) production cost advantage, does a A330neo do that can't be replicated by a combination of:
787
A350
Used A330ceos, which are getting more available and cheap by the month.


My statement didn't include the A330ceo, you added that yourself, so if you ignore that then you have the availability, lower price and commonality. By the time the neweest A330ceos need replacing things may be different, Airbus themselves will have ended ceo production and will be pushing the neo. We've already seen some solid indications that the strong ceo leasing market will be covered well (not perfectly) with the neo. There aren't many A350s or 787s that are sold in smaller numbers to smaller airlines now, but the A330neo has already snagged a few despite not being in service yet.

Unfortunately with the 787 production ramp up and A330neo delays availability is not really a card that Airbus can use for the A330neo right now, that ship has sailed. Boeing’s 787 production costs also appear to be lowering and narrowing the cost gap between the aircraft.
 
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 3:12 pm

Stitch wrote:
And we don't know how GE played into this deal - a significant portion of that "deep discount" could be from GE considering HA had a contract with RR for the Trent 7000 and cancelling the A330-800 might have triggered a breach of that contract.

Gate sale to GECAS? GE engines would be part of any deal they were to finance.

Hawaiian buys from Boeing then sells immediately to GECAS for sale and leaseback, freeing up capital and other balance sheet goodies.
 
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 4:18 pm

Polot wrote:
MrHMSH wrote:
JustSomeDood wrote:

And what, precisely, ignoring the (shrinking) production cost advantage, does a A330neo do that can't be replicated by a combination of:
787
A350
Used A330ceos, which are getting more available and cheap by the month.


My statement didn't include the A330ceo, you added that yourself, so if you ignore that then you have the availability, lower price and commonality. By the time the neweest A330ceos need replacing things may be different, Airbus themselves will have ended ceo production and will be pushing the neo. We've already seen some solid indications that the strong ceo leasing market will be covered well (not perfectly) with the neo. There aren't many A350s or 787s that are sold in smaller numbers to smaller airlines now, but the A330neo has already snagged a few despite not being in service yet.

Unfortunately with the 787 production ramp up and A330neo delays availability is not really a card that Airbus can use for the A330neo right now, that ship has sailed. Boeing’s 787 production costs also appear to be lowering and narrowing the cost gap between the aircraft.


Key words there: 'right now'. I don't think Airbus anticipate the A330neo will only be in production for a few years, it's a medium to long term bet.

The 787's costs are lowering... but I think it will be a long while before they're pricing it low and making good margins on it. If they price it low enough that they're beating the A330neo overall then they're letting valuable margins go, at least for now.
 
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 4:20 pm

MrHMSH wrote:
Polot wrote:
MrHMSH wrote:

My statement didn't include the A330ceo, you added that yourself, so if you ignore that then you have the availability, lower price and commonality. By the time the neweest A330ceos need replacing things may be different, Airbus themselves will have ended ceo production and will be pushing the neo. We've already seen some solid indications that the strong ceo leasing market will be covered well (not perfectly) with the neo. There aren't many A350s or 787s that are sold in smaller numbers to smaller airlines now, but the A330neo has already snagged a few despite not being in service yet.

Unfortunately with the 787 production ramp up and A330neo delays availability is not really a card that Airbus can use for the A330neo right now, that ship has sailed. Boeing’s 787 production costs also appear to be lowering and narrowing the cost gap between the aircraft.


Key words there: 'right now'. I don't think Airbus anticipate the A330neo will only be in production for a few years, it's a medium to long term bet.

The 787's costs are lowering... but I think it will be a long while before they're pricing it low and making good margins on it. If they price it low enough that they're beating the A330neo overall then they're letting valuable margins go, at least for now.

If we are at a point where the A330neo is constantly having a significant availability advantage over the 787 that means:

A) A330 production rate is too high.
B) 787 production rate is too low.
and/or C) There is a clear market preference for the 787 over the A330neo, and then you have to start asking yourself why.

You want the availability advantage to be early in the program when you are trying to establish a large customer base over the competitor (or prevent competitor from establishing their own large customer base). If you have one when the program is maturer against a competitor that is building their planes flat out at a unprecentedly (for a widebody) high production rate it suggests there may be an issue with your product or production rates.
 
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 4:55 pm

zeke wrote:
Polot wrote:
A) A330 production rate is too high.
B) 787 production rate is too low.
and/or
C) There is a clear market preference for the 787 over the A330neo, and then you have to start asking yourself why.


D) production slots sold on overly optimistic ramp up which predicted aircraft would be snapped together in 3 days, without slack in the production to absorb the EIS delays.

We are way past D at this point in the 787’s production. Production/delivery schedules have been firm for years now, Boeing knows how much and how quickly they can produce the plane. When it comes time for new orders they are not selling overly optimistic production slots.

We are talking medium to long term here. If Boeing maintains a large backlog despite the high production rate that means they are constantly getting in enough new orders to sustain the long backlog.
Last edited by Polot on Thu Mar 08, 2018 4:59 pm, edited 1 time in total.
 
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 4:56 pm

Polot wrote:
A) A330 production rate is too high.
B) 787 production rate is too low.
and/or
C) There is a clear market preference for the 787 over the A330neo, and then you have to start asking yourself why.


D) production slots sold on overly optimistic ramp up which predicted aircraft would be snapped together in 3 days, without slack in the production to absorb the EIS delays.
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 5:00 pm

IndiGo, India’s biggest airline, plans to order as many as 50 Airbus SE A330 wide-body jets as it seeks to expand beyond short-haul flights, people with knowledge of the matter said.


http://www.bloomberg.com/news/articles/ ... ide-bodies

Impeccable timing. If true, that's a major boost for the A330neo, even if it starts out more sensible with 10-20 units. I interpret the tone of the article as 'deal not done but well advanced'.

Of interest:

The carrier, based near New Delhi, looked at the Boeing Co. 787 and Airbus’s larger A350 before settling on the A330neo, a re-engined model developed from an older design, the people said. Quick delivery times and the ease of retraining A320 pilots for the jet were a factor in the decision, one person said.
 
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 5:04 pm

bigjku wrote:
I don’t believe Airbus can build an A330neo more cheaply than the comparable 787 can now be built. At least not to nearly the extent that underlay the initial a330neo business case.


:rotfl: :rotfl: :rotfl:

Do you honestly believe that?
 
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 5:39 pm

MrHMSH wrote:
IndiGo, India’s biggest airline, plans to order as many as 50 Airbus SE A330 wide-body jets as it seeks to expand beyond short-haul flights, people with knowledge of the matter said.


http://www.bloomberg.com/news/articles/ ... ide-bodies

Impeccable timing. If true, that's a major boost for the A330neo, even if it starts out more sensible with 10-20 units. I interpret the tone of the article as 'deal not done but well advanced'.

Of interest:

The carrier, based near New Delhi, looked at the Boeing Co. 787 and Airbus’s larger A350 before settling on the A330neo, a re-engined model developed from an older design, the people said. Quick delivery times and the ease of retraining A320 pilots for the jet were a factor in the decision, one person said.

It is entirely plausible that this was put out by Airbus via intermediaries as a controlled leak. Haven't we heard this rumour just a few months back, and why is it being rehashed? Why the timing of this leak when they could done it last week or next? Looks like a medium for Airbus to cushion the PR aspect of a very bad week.
 
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 5:57 pm

jeffrey0032j wrote:
It is entirely plausible that this was put out by Airbus via intermediaries as a controlled leak. Haven't we heard this rumour just a few months back, and why is it being rehashed? Why the timing of this leak when they could done it last week or next? Looks like a medium for Airbus to cushion the PR aspect of a very bad week.


I'm not sure why Airbus would want to do that. The Reuters article linked in the start post is a personal opinion piece, and not an analysis that could influence the stock market. So Airbus doesn't have to respond.

As for the Hawaiian order, Airbus and Boeing flip customers frequently. That's part of business and IMO, people are getting way too emotional over it.
What we leave behind is not as important as how we've lived.
 
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 5:59 pm

KarelXWB wrote:
jeffrey0032j wrote:
It is entirely plausible that this was put out by Airbus via intermediaries as a controlled leak. Haven't we heard this rumour just a few months back, and why is it being rehashed? Why the timing of this leak when they could done it last week or next? Looks like a medium for Airbus to cushion the PR aspect of a very bad week.


I'm not sure why Airbus would want to do that. The Reuters article linked in the start post is a personal opinion piece, and not an analysis that could influence the stock market. So Airbus doesn't have to respond.

As for the Hawaiian order, Airbus and Boeing flip customers frequently. That's part of business and IMO, people are getting way too emotional over it.

I was referring to the Indigo rumour report on Bloomberg that was posted.
 
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 6:33 pm

bigjku wrote:
Sure. Tell me why not?


Reality? Economy?
 
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 6:37 pm

Amiga500 wrote:
bigjku wrote:
I don’t believe Airbus can build an A330neo more cheaply than the comparable 787 can now be built. At least not to nearly the extent that underlay the initial a330neo business case.


:rotfl: :rotfl: :rotfl:

Do you honestly believe that?


Sure. Tell me why not?
 
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 6:50 pm

Channex757 wrote:
Gate sale to GECAS? GE engines would be part of any deal they were to finance.

Hawaiian buys from Boeing then sells immediately to GECAS for sale and leaseback, freeing up capital and other balance sheet goodies.

GECAS is on the market themselves, and hasn't been writing micro margin finance for the best part of 2 years. Boeing Capital is more likely to be behind no or micro margin finance.
 
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 6:52 pm

bigjku wrote:
Amiga500 wrote:
bigjku wrote:
I don’t believe Airbus can build an A330neo more cheaply than the comparable 787 can now be built. At least not to nearly the extent that underlay the initial a330neo business case.


:rotfl: :rotfl: :rotfl:

Do you honestly believe that?


Sure. Tell me why not?


The A330ceo has paid itself off and made a profit for years now. The A330neo like the A320neo is a low risk development and very inexpensive for Airbus to produce. It is most definitely cheaper to produce an A330 than a 787 right now. Although 787 cost seemed to have been going down steadily.
 
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 6:56 pm

ikolkyo wrote:
bigjku wrote:
Amiga500 wrote:

:rotfl: :rotfl: :rotfl:

Do you honestly believe that?


Sure. Tell me why not?


The A330ceo has paid itself off and made a profit for years now. The A330neo like the A320neo is a low risk development and very inexpensive for Airbus to produce. It is most definitely cheaper to produce an A330 than a 787 right now. Although 787 cost seemed to have been going down steadily.


What’s the reason that carriers have not leaped onto it given it’s an otherwise fantastic airframe? Particularly the -800? I’d think that a much lower price would be possible, outweighing any 787 advantage.
-Dave


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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 7:13 pm

PlanesNTrains wrote:
ikolkyo wrote:
bigjku wrote:

Sure. Tell me why not?


The A330ceo has paid itself off and made a profit for years now. The A330neo like the A320neo is a low risk development and very inexpensive for Airbus to produce. It is most definitely cheaper to produce an A330 than a 787 right now. Although 787 cost seemed to have been going down steadily.


What’s the reason that carriers have not leaped onto it given it’s an otherwise fantastic airframe? Particularly the -800? I’d think that a much lower price would be possible, outweighing any 787 advantage.


The -200/-800 are both suffering because their larger sibling, the -300/-900 are both extremely capable aircraft with their 242t and 251t MTOWs respectively. In the early days of the A330 the -200 was bought because the -300 simply wasn’t capable enough and now it is. What I think is a big reason the -800 is struggling is the CASM advantage of the -900. Operating cost of the -800 and -900 are going to be very close and it just makes more sense to operate the larger aircraft that has more revenue potential.
 
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 7:30 pm

mjoelnir wrote:
Revelation wrote:
c933103 wrote:
Given that Airbus still have some unfulfilled small 332 orders with some relatively large airlines, could they be like for example talk with them to convert them to 338 in order to launch it first?

Seems dubious to me.

The A332 actually is more efficient on short sectors and the buyers might be counting on that efficiency. They also may be wanting commonality for spare parts (especially engines) that A330neo can't provide.

The NEO will cost more. Perhaps Airbus would eat the cost difference just to get some A338s into service, perhaps not.


The advantage of the A330ceo over the A330neo on short sectors, was based on estimates done 2014. Some things have changed since than. The weight increase is less than first estimated, most likely the difference of the engines only, not more than 4t. Airbus offers a 6t higher MZFW on both neo versions. The A330-800 grows to 176t and the A330-900 grows to 181t. That means slightly higher max payload on the A330neo than the ceo instead the other way round. The fuel burn of at least on the A330-900 beats planed specs. So the advantage attributed to the A330ceo on short routes should be rather limited to far shorter trips than anticipated in 2014, or perhaps no advantage at all.


On the other hand, if one doesn't need the range, why use A338 instead of A339 at all?

Oh wait, that's why the A338 has 0 orders. :duck:
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bigjku
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 7:33 pm

Jayafe wrote:
bigjku wrote:
Sure. Tell me why not?


Reality? Economy?


I posted this elsewhere.

I don’t believe this to be true. In 2014 analysis around the Delta A339 order put the offered prices at $134 million for the 789 and $124 million for the NEO. This was based on a production rate of 7-8 with the plan of going to 10 according to Leahey about 5 months prior to this order. Rate is now 6. 787 production was then planned for 12 and had less availability. Now it is going to 14. So it’s rate is up 17% and A330neo rates are down between 15 to 40% less than what was contemplated.


Here is the source link.

https://airwaysmag.com/industry/analysi ... ilability/

Feel free to critique their aaaumptions and go ahead and adjust for fuel cost being what it is today. But the fundamental question is this. Is there any data point that would suggest an A330neo would be cheaper than what Airbus thought they could make them for in 2014?

The implied production cost in that article is $96 million or so for an A330neo at a production rate somewhere between 8-10 as that is what Airbus pitched at the time. Rate is now lower.

For Boeing we have the following data points. There is the much debated Hawaii sale at $115 million which implies a production cost in the $90’s somewhere is what Boeing expects.

In fourth grade quarter Boeing delivered 36 787 and reduced its accounting blocks by $751 million between tooling and deferred production cost. The accounting block already has a profit built in. If we assume it’s 10%, which is low for a widebody, we can make some guesses.

If we use the above article to establish 2014 prices for 787-9’s as being around $135 million we know we drove cash incoming of $20.8 million per plane more than we paid to assemble it. If we assume a 10% margin on an average sales price of $135 million the block has a baked in profit of $13.5 million per frame. So in total we assembled 787’s for about $100 million a piece in that quarter. Now that isn’t perfect and yes I have to make assumptions to do it. You could get down to an analysis of it by model type but the rumor is that the 8 isn’t nearly as profitable as the 9 and 10 and the proportion of 9’s and 10’s will continue to rise dramatically so that’s in my favor. But at least I put pen to paper and worked out some numbers and listed my reasons. And the rate is about to go up 17% so per item cost should drop.

I mean it’s not as sucicinetly snarky as saying “reality? Economy?” but I feel like it adds more to the discussion. I invite you to make your own even rough analysis of the situation. Why would an A330neo be any cheaper today than t was projected to be in 2014? Aluminum prices are up about 10% since then. Lithium prices have doubled. PAN production to make carbon fiber has been coming down as it is an industry scaling up. But again, I invite your reasoning as to why it’s so impossible that this could change the equation between these two aircraft.
 
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 7:37 pm

ikolkyo wrote:
bigjku wrote:
Amiga500 wrote:

:rotfl: :rotfl: :rotfl:

Do you honestly believe that?


Sure. Tell me why not?


The A330ceo has paid itself off and made a profit for years now. The A330neo like the A320neo is a low risk development and very inexpensive for Airbus to produce. It is most definitely cheaper to produce an A330 than a 787 right now. Although 787 cost seemed to have been going down steadily.


I don’t doubt that it was initially able to be sold cheaper. What I doubt is if you can do that now. Lots of indicators that 787 production cost are headed below the $100 million mark if not already there. What does an A330neo cost to produce? The source I linked above works out to roughly $95 million in 2014. Any reason to suspect it’s lower than that?
 
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 7:43 pm

In the end you have to be careful about falling into the trap of assuming that the A330 will always be cheaper than the 787, just because it is older/in production longer. The A330 is using very different materials than the 787s, and built in a very different manner. Boeing did screw up initial 787 program execution, but that doesn’t necessarily mean that Boeing’s beliefs about the 787’s potential production costs are unsound. They could still be valid, it is just taking Boeing longer to realize their production cost goals than they thought at program launch.

It is entirely feasible that at some point the 787 will be at about parity with the A330 in terms of production costs, or maybe even slightly cheaper. It is possible that day is closer than many initially realized due to Boeing’s aggressiveness towards cutting costs (squeezing suppliers, increasing rate, etc) over the past couple of years. Remember that the 787 is not a brand new aircraft anymore. Boeing have built ~650 of them; they have some experience with the type, more than many other widebody programs.
 
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Re: Pressure mounts on Airbus A330 in widebody order battle

Thu Mar 08, 2018 8:32 pm

Polot wrote:
In the end you have to be careful about falling into the trap of assuming that the A330 will always be cheaper than the 787, just because it is older/in production longer. The A330 is using very different materials than the 787s, and built in a very different manner. Boeing did screw up initial 787 program execution, but that doesn’t necessarily mean that Boeing’s beliefs about the 787’s potential production costs are unsound. They could still be valid, it is just taking Boeing longer to realize their production cost goals than they thought at program launch.

It is entirely feasible that at some point the 787 will be at about parity with the A330 in terms of production costs, or maybe even slightly cheaper. It is possible that day is closer than many initially realized due to Boeing’s aggressiveness towards cutting costs (squeezing suppliers, increasing rate, etc) over the past couple of years. Remember that the 787 is not a brand new aircraft anymore. Boeing have built ~650 of them; they have some experience with the type, more than many other widebody programs.


I wonder how does the material cost compare. After all, 787 has a lot more composite material and those material do cost more. Regardless the techniques for building the plane, the material cost won't go away ...
Anyways, I think the bigger pricing issue for 787 is whether Boeing wants to do something with their deferred cost. At the current rate, I don't think they can zero the deferred cost when the current backlogs are delivered.

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